Bitcoin is collected through ASIC miners. Here's what it is and why it matters

As much as cryptocurrency mining was originally designed to be something everyone could do with their home computer, those days are long gone. Today, whether you’re mining Bitcoin, Litecoin, DASH, or a host of other cryptocurrencies — the most effective way to do so is with a piece of hardware known as an ASIC miner.

It’s not a desktop PC or a dedicated graphics card mining rig — it’s something else. Application specific integrated circuits, or ASICs, are chips that are designed with a singular purpose, ranging from audio processing to managing a cellphone call. In the case of cryptocurrency mining though, these chips are built into specifically-designed motherboards and power supplies, constructed into a single unit. It’s not just a purpose built machine though, it’s purposely designed and developed hardware right down to the chip level.

What an ASIC miner actually does

In a nutshell, mining is the process of running complicated calculations in the search for a specific number. Mining hardware, whether it’s an ASIC miner or a GPU mining rig, has to run through many calculations before finding that number. In proof of work systems like Bitcoin, the first one to find that number gets a reward — at the time of writing, 12.5 Bitcoins. That’s worth around $110,00.

There are so many people and powerful computing systems trying to mine Bitcoin though, that almost everyone bands together with a group of miners to try and find that number. That said, miners tend to earn more if they have faster hardware. That’s why people who can afford it opt for ASIC miners because it gives them the greatest chance of earning cryptocurrency in exchange for their investment.

Each cryptocurrency has its own cryptographic hash algorithm and ASIC miners are designed to mine using that specific algorithm. Bitcoin ASIC miners are actually designed to calculate the SHA-256 hash algorithm. In the case of Litecoin, Scrypt. That means technically they could mine any other coin that’s based on the same algorithm, though typically people who buy ASIC hardware designed with one particular coin in mind, mine that coin.

What makes an ASIC miner better?

ASIC miners differ from a graphics card or CPU mining system in that those more general pieces of hardware are designed to do more than one thing. They also just happen to do it better than anything with a more general purpose focus.

When it comes to mining cryptocurrencies, all that really matters is that the cryptocurrency you mine is worth more than what you spend on hardware and electricity. Those margins can be closer than you might think, because mining cryptocurrency can be expensive. Hardware can be costly to buy up front, and some of it can cost thousands of dollars a year in electricity to run.

So when it comes to the mining hardware you choose, having more efficient systems is incredibly important. That’s where ASIC miners come in. Since they are designed from the ground up to perform the calculations required by a specific cryptographic hash algorithm used by an individual, or handful of, cryptocurrencies, they are incredibly efficient at doing so. They’re powerful — offering a high “hashrate” — and energy efficient, using far less power than a more general piece of hardware might do for the same task.

This combination of performance and low-power usage makes them much more economical to run than more general purpose hardware. That’s why in the case of Bitcoin and Litecoin, ASIC mining is just about the only way anyone mines those cryptocurrencies any more. If the new Ethereum ASIC miner turns out to be just as successful, that could soon be the case for that popular cryptocurrency too.

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